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BobAlison29 karma

Mainstream economists often point to Bitcoin's controlled supply as a fundamental weakness, insisting that it discourages spending and will lead to "hoarding".

What are some good examples of virtual and game economies with a restricted money supply? How did this kind of monetary policy affect the desire of participants to spend or not spend the currency?

BobAlison20 karma

Full quote from the article:

“It [Bitcoin] actually is dangerous and people should be aware it’s like the early internet,” he tells the Financial Times. “If you lived through time, you remember lots of press articles came out saying don’t give internet companies your credit card details. But the internet grew past that. Bitcoin will be the same way. Over time, I will stop saying to people, ‘Don’t use it unless you’re technically proficient enough to keep your computer secure’.”


Bitcoin has exposed a problem that's been with us all along: the average user can't keep their own computer safe from the network. This isn't to say that the average user isn't intelligent - it's that computer/network technology is so complicated that only specialists can really understand it and defend against attacks. Even then, it takes a lot of resources to have any confidence. For example, here's one security expert's take:

The whole concept of security awareness training demonstrates how the computer industry has failed. We should be designing systems that won't let users choose lousy passwords and don't care what links a user clicks on. We should be designing systems that conform to their folk beliefs of security, rather than forcing them to learn new ones. ...


The internet is a dangerous place - still. Most computers store so little of value, that it's not worth the effort to attack them. However, a Bitcoin private key (the thing that allows you to spend bitcoin) is the equivalent of cash.

A bitcoin user storing private keys on their network-connected computer is essentially carrying a bag of cash through a dark alley. They're going to get mugged sooner or later.

Two solutions have gotten the most attention:

  1. Keep private keys off of network-connected computers. There are many ways to do it, and last year saw the introduction of a dedicated hardware device, the Trezor (https://www.bitcointrezor.com/).
  2. Distribute spending authority over multiple private keys kept on separate computers. One way to do this is with "Multi-signature addresses", and companies have already started offering this kind of security a service. For example, GreenAddress (https://greenaddress.it/en/) and BitGo (https://www.bitgo.com/).

BobAlison17 karma

Game devs have tried everything, and failed many times.

What's the best example of a game that tried to restrict the money supply and failed?

BobAlison13 karma

They lose control when the drains are smaller than the faucets.

I'm not sure I follow. If the drain is smaller than the faucet, doesn't that cause the opposite problem - too much currency?

In Bitcoin's case the faucet is shrinking at a regulated rate over time and will eventually close down completely.

If anything, the drain is growing over time as funds are lost due to lost private keys.

So I'm probably missing something, but it seems like you described the opposite situation to the one that faces Bitcoin.

What example can you think of where a game's faucet was shut off? What happened?